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Global regulators will be questioning the Libra Libra project in the wake of European governments' concerns about the threat that digital currency poses to financial stability.
Representatives from Libya will meet officials from 26 central banks, including the Federal Reserve and the Bank of England, in Basel at the first major meeting between Libra's founders and decision-makers since Facebook unveiled its draft global payments, officials at the FT said.
Benoît Coeuré, of the European Central Bank, who will chair the meeting, warned that "the bar for regulatory approval will be very high" for Libra to work in the EU. He spoke after a meeting of EU finance ministers in Helsinki, during which governments expressed "strong concerns" about how Libya and other Digital currency could destabilize the financial system and undermine the sovereignty of governments and central banks.
Mr. Cœuré will chair Monday the meeting between Libra and the Commission for payments and market infrastructure, a forum that is part of the Bank for International Settlements.
The founders of Libra were invited to answer key questions about the scope and design of the currency. The findings of this analysis were then incorporated into a report for G7 finance ministers in October, said one official. Facebook and BIS declined to comment.
Facebook's digital currency initiative immediately caught the attention of governments and central banks. Bruno Le Maire, French Finance Minister, said Libya should be stalled in the EU, as it risks undermining governments' "monetary sovereignty" in the absence of a government. appropriate regulation.
"Under the current conditions, we should refuse the development of Libra in the EU," said Le Mayor.
France assumed the rotating presidency of the G7, which quickly convened a group specializing in the control of Libya and other so-called stable currencies, also chaired by Mr Coeuré. The Financial Stability Board, another Basel-based group that makes recommendations to the G20 and is chaired by Deputy Governor of the US Federal Reserve Randal Quarles, has also announced that it will study Facebook's plans.
Regulators and governments have rushed to get more information on the scope and design of Libra since the announcement of the project in June. The antitrust authorities of the European Commission sent a questionnaire to the company as part of a preliminary investigation to determine whether the currency unfairly disadvantaged competitors.
Brussels is also in the early stages of designing a regulatory framework for Libya and other stable currencies designed to be backed by durable assets and currency baskets. Valdis Dombrovskis, EU Vice President for Financial Services, said that there was a "strong willingness to act at EU level".
"The implications for financial stability raise some concerns. The risks must be fully understood and the EU must act in a unified way, "Dombrovskis said.
European policymakers are particularly worried about the popularity of Libra in the European Union, where consumers are still struggling to make their cross-border payments.
Mr Coeuré said on Friday that the project was an "alarm bell" for governments and central banks, who needed to work on technologies to make payments to consumers "faster and cheaper".
Global central banks have also touted the possibility of developing a rival digital currency to undermine private initiatives of tech giants such as Facebook. Mark Carney, BoE Governor, and Christine Lagarde, ECB's new President, have been supporting central banks in creating their own digital currencies.
Mr. Cœuré said it was time for regulators "to intensify their thinking on the digital currency of the central bank".
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